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平日價
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1. Is estate tax imposed? Common payment items upon the insured’s death
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Included in the total estate:
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Not included in the total estate:
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Conditions for the above items to be exempt from estate tax:：
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Reminder: An investment-linked life insurance policy is a combined policy that includes both “life insurance” and “investment.” The National Taxation Bureau will make a comprehensive assessment to determine whether it should be included in the total estate.
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2. Estate Tax Standards for Annuity Insurance
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Included in the total estate
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Not included in the total estate
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Legal basis
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Purpose of insurance
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To protect the decedent’s livelihood in old age
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To prevent family members from losing their source of financial support due to the decedent’s death, where the insurance contract provides that periodic payments will be made to the designated beneficiary after the decedent’s death.
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3. If life insurance has a designated beneficiary, will estate tax still be an issue?
Article 16, Subparagraph 9 of the Estate and Gift Tax Act provides that “life insurance proceeds agreed to be paid to the beneficiary designated by the decedent upon the decedent’s death” are not included in the total estate.
However, the National Taxation Bureau will determine whether estate tax applies based on whether the insurance is property of the policyholder, namely the owner of the insurance property.
Where A is the decedent and B is the heir:
However, the National Taxation Bureau will determine whether estate tax applies based on whether the insurance is property of the policyholder, namely the owner of the insurance property.
Where A is the decedent and B is the heir:
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Scenario
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Policyholder
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Insured
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Beneficiary
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Upon A’s death
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Explanation
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Estate tax applies
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A
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A
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B
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Not included in the estate
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In principle, “death insurance benefits paid upon death” are not included in the estate.
Note: Avoid the eight major substantive taxation principles.
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A
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B
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B
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Included in the estate
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If the insurance property belongs to A, and the insured B is still alive, it will be regarded as A’s estate.
Note: If A states in the will that the estate is to be left only to B, this may lead other heirs to claim that their compulsory portion has been infringed.
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A
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B
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A
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Included in the estate
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If the insurance property belongs to A, and the insured B is still alive, this is equivalent to having no designated beneficiary because A has died, and it will be included in the estate.
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No estate tax applies
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B
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A
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B
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Excluded from the estate
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If the insurance property belongs to A, and the insured B is still alive, this is equivalent to having no designated beneficiary because A has died, and it will be included in the estate.
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B
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B
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A
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Excluded from the estate
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If the insurance property belongs to B, when A dies, the beneficiary will be changed according to the order of priority, and there will be no estate tax issue.
Note: If no other beneficiary is designated, the payment will be made according to the statutory order of heirs, and the insurance claim payment will be included in the insured’s total estate, which may result in estate tax being payable.
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4. Three Conditions for Estate Tax Exemption
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Understand in advance whether the nature of the above insurance claim payments will cause them to be included in the total estate.
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A beneficiary may be designated, and the beneficiary must still be alive when the insured dies.
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Avoid the eight major scenarios under the substantive taxation principle.
5. In addition to estate tax, gift tax should also be considered for insurance
Where A is the policyholder, B is the insured, and C is the beneficiary:
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Scenario
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Policyholder
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Insured
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Beneficiary
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Explanation
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Possible gift tax issue
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A
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B
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C
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This situation occurs in the case of death insurance benefits. For example, if B unfortunately dies in an accident, and C receives the death insurance benefits, the payment will also be regarded as a gift. This is equivalent to A giving the death insurance benefits to C through the insurance policy, and it will be included in A’s total gift amount for that year.
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A → C
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B
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C
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If the insurance premiums were originally paid by A, and during the insurance period C becomes responsible for paying the premiums, then when the policyholder is changed and C assumes the premium payments, this is equivalent to giving the policy value reserve in the insurance policy to the child, and it is likewise regarded as a gift.
Common situation: The original policyholder is a parent. When the child becomes financially able to pay the premiums, the policyholder is changed from the parent to the child. At the time of the change, there may be a gift tax issue. Note: If the policy value reserve on the date of change does not reach the NT$2.44 million tax exemption, and there are no other gifts, an application may be made to the National Taxation Bureau for a tax exemption certificate. |
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C, with A being the actual payer
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B
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C
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Although C is listed as both the policyholder and the beneficiary in name, if A is the actual payer and C does not in fact have the ability to bear the premiums, this will still be deemed a gift. Therefore, attention should be paid to the fact that it is not enough for the policyholder and beneficiary to be the same person; the flow of funds and repayment ability must also be considered.
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